August 15, 2009

Colonial BancGroup sold to BB&T

The Federal Deposit Insurance Corp. says it has sold failed southern U.S. bank Colonial BancGroup Inc. to BB&T Corp.

The Wall Street Journal's MarketWatch reported the FDIC seized the Alabama lending company Friday, marking the largest bank failure to take place in 2009.

In addition to the failure of BancGroup, FDIC officials said four other banking victims of the recession -- Pittsburgh's Dwelling House Savings and Loan, Community Bank of Arizona, Las Vegas's Community Bank and the Union Bank of Gilbert, Ariz. -- also closed.

MarketWatch said BB&T Corp. agreed to purchase nearly $22 billion of BancGroup's assets, which were estimated at the end of June to total $25 billion.

The remaining BancGroup asset will remain with the FDIC as the insurance group will attempt to sell the assets later.

BB&T Corp. and the FDIC will share losses of Colonial assets worth $15 billion and the Colonial deal is expected to cost the FDIC's Deposit Insurance Fund nearly $2.8 billion.